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Thursday, August 8, 2013

U.S.-Vietnam Relations in 2013: Current Issues and Implications for U.S. Policy

Mark E. Manyin
Specialist in Asian Affairs

After communist North Vietnam’s victory over U.S.-backed South Vietnam in 1975, the United States and Vietnam had minimal relations until the mid-1990s. Since the establishment of diplomatic relations in 1995, overlapping security and economic interests have led the two sides to expand relations across a wide range of sectors and begin to form a strategic partnership of sorts. Perhaps most prominently, in 2010, the two countries mobilized a multinational response to China’s perceived attempts to boost its claims to disputed waters and islands in the South China Sea. This coordinated effort has continued to the present day. 

U.S. Interests 

In the United States, voices favoring improved relations have included those reflecting U.S. business interests in Vietnam’s growing economy and U.S. strategic interests in expanding cooperation with a populous country—Vietnam has over 90 million people—that has an ambivalent relationship with China and that is asserting itself on the regional stage. Others argue that improvements in bilateral relations should be conditioned upon Vietnam’s authoritarian government improving its record on human rights. The population of more than 1 million Vietnamese Americans, as well as legacies of the Vietnam War, also drive continued U.S. interest. 

Vietnamese Interests 

Vietnamese leaders have sought to upgrade relations with the United States in part due to the desire for continued access to the U.S. market and to worries about China’s expanding influence in Southeast Asia. That said, Sino-Vietnam relations are Vietnam’s most important bilateral relationship and Vietnamese leaders must tiptoe carefully along the tightrope between Washington and Beijing, such that improved relations with one capital not be perceived as a threat to the other. Also, some Vietnamese remain suspicious that the United States’ long-term goal is to erode the Vietnamese Communist Party’s (VCP’s) monopoly on power. Thus far, an apparent intensification of political infighting among Vietnam’s top leaders in 2012 and 2013 does not appear to have affected the fundamental dynamics of Vietnam-U.S. relations. 

Economic Ties 

The United States is Vietnam’s largest export market and in some years its largest source of foreign direct investment. Bilateral trade in 2012 was over $20 billion, a 13-fold increase since the United States extended “normal trade relations” (NTR) treatment to Vietnam in 2001. Increased trade also has been fostered by Vietnam’s market-oriented reforms. From 1987 to 2007, Vietnam’s annual gross domestic product (GDP) growth averaged over 7%. Since then, Vietnam’s economy has been buffeted by economic difficulties that have lowered growth rates and raised inflation. The United States and Vietnam are 2 of 11 countries negotiating a Trans-Pacific Strategic and Economic Partnership (TPP) regional free trade agreement (FTA). To go into effect, legislation to implement a TPP agreement (if one is reached) would require approval by both houses of Congress. Vietnam is one of the largest recipients of U.S. assistance in East Asia; since the late 2000s, annual U.S. aid typically surpasses $100 million, much of it for health-related activities.

Human Rights 

Human rights are the biggest thorn in the side of the relationship. Although disagreements over Vietnam’s human rights record have not prevented the two sides from improving relations, they do appear to create a ceiling for the speed and extent of these improvements. Vietnam is a oneparty, authoritarian state ruled by the Vietnamese Communist Party (VCP), which appears to be following a strategy of permitting most forms of personal and religious expression while selectively repressing individuals and organizations that it deems a threat to the party’s monopoly on power. Most human rights observers contend that the government, which already had tightened restrictions on dissent and criticism since 2007, further intensified its suppression in the first half of 2013.

Some human rights advocates have argued that the United States should use Vietnam’s participation in the TPP FTA talks as leverage to pressure Hanoi to improve the country’s human rights situation. Also, since the 107
th Congress, various legislative attempts have been made to link the provision of U.S. aid, as well as arms sales, to Vietnam’s human rights record.

Date of Report: July 26, 2013
Number of Pages: 39
Order Number: R40208
Price: $29.95

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